South Pacific Business Development (SPBD)Foundation
Newsletter #17 - August 2005
by Greg Casagrande
Talofa Lava and Welcome to the seventeenth edition of the SPBD Foundation Newsletter - your prime source for up to date information on the latest developments at SPBD as well as recent microfinance industry news.
SPBD Foundation - Who We Are
SPBD Foundation is a charitable, Samoan-based, micro-enterprise development organization dedicated to providing poor women with real opportunity for self-employment. We provide our members with training, unsecured credit and ongoing guidance and motivation to help them start sustainable, prosperous small businesses based around existing livelihood skills. These small businesses generate income for our members and enable them to substantially improve their way of life. In our five years of work, SPBD has helped over 5,200 such persons.Visit our website at www.spbd.ws
SPBD - by the Numbers (thru 31 July 2005)
- Total # of Businesses Started................................... 5,289
- Total # of Loans Issued Since Inception (Jan 2000)...... 8,456
- Total ST$ Amount of Loans Issued Since Inception - ST$7,347,133
- Total US$ Amount of Loans Issued Since Inception - US$2,617,783
- Portfolio in Arrears Over 30 Days................................. 2.0%
This Month's Member in the Spotlight:
Savaii too of Tuamasaga Village - Bakery
According to Savaii Too, "It is lucky that we live in Samoa. My children can run around in just a lavalava [sarong] and no shirt. My little ones don't need clothes. I don't know how we could live anywhere where it's cold." Her husband makes ST$40 (US$14) a week as a short order cook, hardly enough to feed their six children and two grandchildren. Their one-room home has a corrugated-iron roof and no windows. A lean-to serves as the kitchen, sitting room, and bedroom for the older boys.
The children were often sent home from school because the family could not pay their school fees. Even when fees were paid up, the family frequently lacked bus fare to get the children to school. The family continued to grow, and their miserable poverty seemed perpetual. Then Savaii was introduced to SPBD and learned that she might qualify for a loan that would help her establish a business.
Her ST$750 loan financed a small bakery specializing in keke saina and jam tarts, favourite local snacks. Her loan also financed the making of a crude cement oven and a two-burner gas stove for jam making. She works out of her kitchen and delivers her products to four shops twice a week. Her weekly sales now average ST$200, providing a net income of ST$100 (US$35) a week.
At first, Savaii thought the bakery would supplement her husband's wages. But she has become the main provider. She is working hard to pay off her loan so that she can apply for a larger loan. She eagerly anticipates expanding her business so her family can have a larger home and indoor plumbing. But for now, after buying food and paying school fees, she invests her profits in her business so it can grow.
Eventually Savaii's husband will give up his present job to work in their bakery. As of yet, she feels that they are not ready for him to stop working as a cook. But she can see the potential for developing her venture into a business that will provide work for all the adults in her family.
Before she opened her bakery, the family had money only one day a week, on payday. Having a little money every day is a new experience. "It really feels good," she says, with the pride of a true entrepreneur.
Casagrande Travels Globally Extolling the Virtues of Micro-Enterprise Development
Over the last four months I have set an all time personal travel record. It has been a great pleasure. I have spoken to student groups (Kennedy School of Government, University of Chicago Graduate School of Business, Kellogg, Colgate University, Wardlaw-Hartridge School), government entities (in Samoa, NZ, France and the UK), met with finance industry leaders (London, The Netherlands, NY, Chicago, Las Vegas, Denver, Singapore) and participated in MF industry conferences around the world.My ongoing themes are:
1. Poverty is an enduring major global problem.
2. Past efforts have been largely ineffective.
3. The key to solving poverty is to empower the poor to solve their own problems.
4. Micro-Enterprise Development/ Microfinance (MED/MF) provides that empowerment.
5. MED/MF delivery organizations (such as SPBD) can be commercially operated.
6. MED/MF outreach efforts can be scaled to reach hundreds of millions of poor families by building linkages with the formal capital markets.
7. For the first time in human history, we now have the ability to eradicate poverty, by harnessing the power of financial markets, and well run microfinance organizations.
To me, that is exciting stuff. And I have had the great pleasure to share that message with groups all around the world. I look forward to continuing the dialogue that I have begun with many of you and to taking this vision and turning it into a reality.
Kellogg Corps Comes to the AID of SPBD Foundation
SPBD Foundation has been blessed in the past with numerous world class volunteers. This summer is no exception. Two students from the Kellogg School of Management at Northwestern Univesity, Andre Do Valle and Ricardo Cilloniz, have come to work for SPBD via the Kellogg Corps program this summer.Ricardo and Andre are working on completing SPBD's Finance Manual and our internal controls and audit mechanisms. While SPBD foundation is a not-for-profit charitable organization, we are for all intents and purposes a bank for the poor. And as such, we require the same stringent internal controls and processes that any formally regulated financial institution may have. While SPBD's processes are already good, Andre and Ricardo will help us take them to the next level of being "best-in-class."
Update on the United Nations International Year of Microcredit - 2005 (UN-IYM)
As many of you are aware, I have the great honor of serving on the UN-IYM 2005 www.yearofmicrocredit.org Advisors Group. Each issue of this newsletter, I am trying to share with you some of the themes coming out of the Year. This issue I'd like to share with you the consented key principals of microfinance (MF) as stated by CGAP (a World Bank organization) and further endorsed by the G8 Summit. These principals provide a good comprehensive overview of the industry and where it should be headed over the remainder of this decade if it is to achieve its grand ambitions of dramatically reducing poverty.1. Poor people need a variety of financial services, not just loans.
2. Microfinance is a powerful tool to fight poverty.
3. Microfinance means building financial systems that serve the poor.
4. Microfinance can pay for itself, and must do so if it is to reach very large numbers of poor people.
5. Microfinance is about building permanent local financial institutions.
6. Microcredit is not always the answer. Microcredit is not the best tool for everyone or every situation.
7. Interest rate ceilings hurt poor people by making it harder for them to get credit.
8. The role of government is to enable financial services, not to provide them directly.
9. Donor funds should complement private capital, not compete with it.
10. The key bottleneck is the shortage of strong institutions and managers.
11. Microfinance works best when it measures-and discloses-its performance.
For further elaboration on each of these important points, please refer to: www.cgap.org/keyprinciples.html
Book Review – Saving Capitalism from the Capitalists by Raghuram Rajan and Luigi Zingales
When I was first presented this book as a gift at the University of Chicago GSB, I was very skeptical given the title. My skepticism has long since been relieved.Raghu and Luigi have put together a comprehensive, detailed and persuasive argument about the enormously positive impact financial markets can have on eradicating poverty. They repeatedly demonstrate how the free market system is the "most effective way to organize economic activity and that free financial markets are at the core of such a system" and that "despite their imperfections, free financial markets create opportunity, breed competition, foster innovation and ultimately promote growth." Their perspective is global and they provide many good answers to the questions of why some countries have flourishing financial markets and others not.
I especially enjoyed a couple of cold pints with Luigi in Paris recently. His voice is certainly one from which the world will be hearing more.
The PPSEAWA Visit SPBD Foundation in the Field and Leave Impressed
Two weeks ago the Pan Pacific South East Asia Women's Association (PPSEAWA) held an International Workshop in Samoa. SPBD is proud that Viopapa Anandale, a member of our Advisory Board, is the International President of PPSEAWA. The workshop brought dozens of women leaders from across the region to Samoa for a three day event to discuss women development issues. One of the consensed highlights of the workshop was a field visit to several of SPBD's micro-entrepreneurs at work on their businesses in their rural villages. Tim Barker, SBPD's General Manasger, was one of the featured speakers at the event and he concluded his remarks with the following observation:"At SPBD I see our job as working for the hopes, dreams and obstacles of our members. We should not tell them what these things are. They tell us. We need to listen and try and do what the rules of our program can do to help. We don't give them "solutions" or tell them we have "solutions". They find these themselves. We don't improve their lives. They improve their lives themselves. All we do is provide a program they can use to help them do this."
Those are words well said. SPBD is in the business of helping the poor find their own solutions to poverty. Those are the solutions which make a deep impact and keep a family out of poverty – permanently.
Casagrande to Keynote at Australian International Year of Microcredit Event
The UN Association of Australia is hosting a major two-day conference in Melbourne, August 29-30, entitled "Towards an End to Global Poverty: Empowering Communities and Individuals through Financial Inclusion". I am honored to be one of the keynote speakers at the event, along with such luminaries as John Hatch, the founder of FINCA.I will also be participating in three panel sessions and look forward to discussing items such as a blue print for staring an MFI from scratch, overcoming obstacles to ramping up microfinance outreach in the Pacific region and challenges to the commercialization of MF globally. The goals of the conference are to:
- Increase awareness and understanding of microfinance as an effective tool for the alleviation of poverty;
- Promote inclusive financial systems and support sustainable access to financial services; and
- Encourage corporate sector involvement in microfinance.
The SPBD Video - Now Available!
SPBD has just created a 23 minute video of our operations. See interviews with SPBD microentrepreneurs, listen to SPBD meetings in action, see an interview with Samoa's Deputy Prime Minister, Hon. Misa Telefoni, watch Greg Casagrande explain the program to new SPBD members and more!You can buy the video for US$50 (includes postage anywhere in the world). All donations for US$1,000 or more will receive a free video. To get your copy of the video send an email to greg@spbd.ws and request a video.
Why Support SPBD?
There are many excellent reasons to support SPBD.
1) SPBD is one of the most cost effective organizations anywhere in the world at eliminating poverty. SPBD has remarkably low costs and is well managed. I have personally hired and trained a terrific and committed staff of Samoans. They are enormously effective, yet they are equally cost efficient. I am a full-time unpaid volunteer. I am confident that none of the major development organizations has a cost structure close to ours.
2) The nature of our product, the entrepreneurial micro-loan, is incredibly productive and effective. SPBD provides the poor with opportunity and instills them with dignity and self-confidence. We provide the poor with 'a hand-up, not a hand-out' and that separates us from most development organizations. It also gives our members the proper incentive they need in order to stay out of poverty, on their own.
We empower the poor to take charge of their lives. Our loans are used to propel families forward and out of poverty. Our members realize that SPBD presents them with unprecedented opportunity. We provide the opportunity, and they work their tails off and make their dreams a reality.
3) A really great aspect of microfinance is that when a loan is paid off, it is recycled back into the portfolio and a new loan is issued to another needy aspiring micro-entrepreneur. Thus a gift to SPBD is truly the gift that never stops giving.
4) SPBD's long-term goal is to create a bank permanently dedicated to providing the poor with the financial services they need to make their dreams a reality. Within 18 months, SPBD will be financially self-reliant and thus a charitable investment now in SPBD is truly an investment in providing perpetual opportunity to the poor.
Picture Comment -- These boys are carrying water back to their village directly behind them. Their family home has a dirt floor and no access to electricity, running water or proper sanitation. By working with SPBD, families in this village will be able to generate income and will be empowered to make improvements in the basic living conditions of their families and in the quality of their children's education.
How You Can Help the Cause
We require support to help fund both operating costs and financing costs of loans to our members. More specifically, we are happy to:1) Accept donations of any size. In the US, through our partner organization, SPBD-USA, a 501c3 organization, we can provide donors with a tax deduction. US donors may write a check to SPBD-USA and mail it to:
SPBD-USA
3102 Circle Hill Road
Alexandria, VA, 22305
Donors in New Zealand can send their contributions to:
South Pacific Business Development Foundation
6 Buchanan Street
Devonport, Auckland
Donors outside of the US or NZ can send their contributions to:
South Pacific Business Development Foundation
PO Box 1614
Apia, SAMOA
2) Accept gifts of equipment. (E.g. PC's, printers, copier, used vehicles).
3) Accept funding to sponsor a specific position. (E.g. salary for an accountant or center manager -US$5,000.)
4) Accept sponsorship for an individual member (US$200) group of five members (US$1,000) or an entire village of members (US$5,000) via a low cost, long term revolving loan.
5) Or make a donation via your credit card right now using our partners at "Just Give" by clicking here:
You Can Also Help by LENDING money to SPBD
SPBD is actively taking on low cost (0% to 5%), long-term (> 1 year) loans. These are essentially SPBD savings bonds. You get a modest return on your investment and the knowledge that you are helping the poor. Send me an email if you are interested. We have a few people doing this, and it is a great way to make a big impact.If you are interested or know of someone or an organization that may be interested, please respond to this newsletter or send me an email at gregcas@ihug.co.nz and I will be delighted to work with you.
Thanks to All of our Very Generous Donors
Please visit our website to view the growing list of wonderful people and great organizations that are helping us to achieve our objectives.You can view our list of supporters by clicking here: www.spbd.ws/fundingspbddonors.htm.
Without the generosity of our donors, none of this would have been possible. If you'd like to see your name up on that list - you know what to do.
Questions/ Distribution List
Do you have any questions, comments or suggestions? Please contact me and I will be happy to respond to all inquires.Can you think of any colleagues or friends who would be interested in receiving this newsletter? If so, please email me their name, organization and email address and I will include them in the next mailing. Would you like to be removed from this distribution list? No problem. Please send an email stating so, and I will promptly handle.
Tofa Soifua
Thanks for reading the seventeenth edition of our SPBD Foundation newsletter.
All the very best and Tofa Soifua!
Greg Casagrande
Phone: (685)-20189
Fax: (685)-26208
Email: gregcas@ihug.co.nz or greg@spbd.ws
Web: www.spbd.ws
